The Organization for Economic Cooperation and Development’s (OECD) Phase 4 Report on Switzerland found that its government is largely ineffective in preventing or prosecuting foreign bribery. These deficiencies are especially concerning because its economic position exposes, “it to relatively acute risks of foreign bribery.” Successful foreign bribery cases in Switzerland are scarce, with only seven successful cases since the country’s entry into the OECD. The auditors attribute the low number of cases to major weaknesses in Switzerland’s enforcement measures, detection framework, and refusal to reform.

Insufficient Enforcement Measures

Switzerland has not only failed to complete a substantial number of successful foreign bribery cases, but its enforcement measures have raised questions about “Switzerland’s compliance with certain core requirements of the [OECD’s Anti-Bribery] Convention.” The Phase 4 audit revealed “conflicting judicial interpretations, different criminal policies between law enforcement authorities,” and insufficient sanctions that impede predictable enforcement. 

The auditors attribute “questionable” acquittals to Switzerland’s restrictive interpretation of the Convention. Swiss law enforcement authorities have repeatedly favored restrictive interpretations of the Anti-Bribery Convention without providing a legal basis for the choice of procedure. The on-site visit revealed that “prosecutors have no guidelines on applying corporate liability provisions.”

Summary punishment orders are often used as the sole solution, which prevents sanctions from being effective, proportionate, or dissuasive. These orders were “originally designed for ‘minor cases.’” and have created an “inadequate system of sanctions for serious failures to comply.” Failure to take stronger enforcement actions prevents these actions from deterring other bad actors and undermines any efforts to enforce satisfactory corporate liability.

Map of countries Swiss companies have allegedly bribed

Complete Lack of Whistleblower Protections

The examination attributes detection deficiencies to “the absence of a legal framework” for whistleblower protections or reporting obligations. The fact that “no cases of foreign bribery had been brought to the attention of the cantonal Offices of the Attorneys General or the OAG by a whistleblower” or “through reports from federal or cantonal staff” makes it clear that a lack of protection is limiting Switzerland’s ability to detect foreign bribery.

In Switzerland, “whistleblowers expose themselves to criminal prosecution or retaliatory measures if they make a report.” Whistleblowers from a high-profile oil company case alleged that they were silenced through dismissal or relocation after reporting suspicious payments.

Whistleblowers in Switzerland working at the federal or cantonal level are set up for failure because they must report potential misconduct directly to their supervisors, which disincentivizes reporting due to fear of retaliation. In addition to not being protected from retaliation or harassment, “whistleblowers have been subject to prosecution for violation of their official secrecy.” Swiss law provides no “specific remedies for victims of retaliation other than dismissal.”

Despite requirements under international standards, “lawyers, notaries, accountants and auditors are not in a position to contribute to [foreign bribery] detection” because they are not provided any legal protection.

Broader Detection Failures

Reports from investigative journalists about a “‘climate of intimidation’ leading to self-censorship, difficulties in protecting their sources and in investigating ‘sensitive’ matters” are extremely concerning. For Swiss journalists trying to publish “sensitive news about powerful economic interests,” barriers can “impinge upon journalists’ freedom to expose instances of foreign bribery or economic crime.” A lack of transparency from the OAG had been fueled by these difficulties for journalists in difficulties accessing judicial decisions.

Switzerland still has yet to follow a recommendation given in 2009 and still has “not established that external auditors who discover indications of possible acts of bribery are obliged to report these.” Auditors who report suspicious activity may be subject to criminal liability for “violation of professional confidentiality.”

Why the Swiss Case is Special

Switzerland might have slightly better statistics, with 7 successful cases, compared to OECD countries like Sweden, which have none. However, weaknesses in the Swiss system are especially concerning because its economy is already extraordinarily vulnerable to corruption due to unique characteristics that make it more susceptible to foreign bribery risks.

With 62.9% of GDP coming from exports, and “several multinational businesses have a registered office in Switzerland.” The activities of these companies, many of which operate in sectors with high foreign bribery risks, weaken the Swiss economic system's ability to prevent corruption due to their ability to conceal illicit activities. One of the sectors with the highest risks of corruption, the global oil trade, conducts a third of its business from Switzerland. 

38.1% of their corruption cases are related to domiciliary companies, which “reduce the transparency of the economic background of capital flows in any given business relationship.” The “large number” of domiciliary companies and other risk factors prevent Switzerland’s ability to “enforce satisfactorily some of the Convention’s requirements.” Given the volume of international trade conducted from Switzerland, to consider their seven successful enforcement actions a success in stopping foreign bribery would be naive.

No Reform

Switzerland’s apathetic efforts to draft a bill that would provide some safeguards for whistleblowers are just another example of its unconcerned attitude towards anti-corruption efforts. The examiners found the bill to be “limited in scope, especially in the absence of a clearly defined framework to ensure confidentiality of the report and protection of the whistleblower’s identity.” 

International Intervention

The lack of domestic enforcement actions does not mean Switzerland has miraculously been safe from foreign bribery. The United States has produced 81 successful FCPA enforcement actions against Swiss companies. In the 15 largest cases, the SEC and DOJ collected over $7 billion that could have gone to Swiss enforcement agencies if they had better detection and enforcement measures. In just one foreign bribery scandal involving Odebrecht and Braskem, the United States collected over $2.6 billion. Anti-bribery enforcement will not stop; it will just be conducted elsewhere. Allowing other nations to conduct foreign bribery enforcement in Switzerland in its stead will only benefit other countries and prevent Switzerland from collecting the rewards. If Switzerland wants to protect the interests of its citizens, it must start taking the OECD recommendations more seriously.